Why investors should have a sense of India’s new ruling party

Narendra Modi has ruled the Indian state of Gujarat for the past 13 years, clocking an impressive growth rate of over 9% per annum. He’s known as an investor-friendly leader with a focus on minimizing bottlenecks in the system. If he manages to scale up his performance as a business-friendly chief minister of state while leading India, foreign investments may pick up. This would benefit businesses and, in turn, investors. The key Indian stock market index, the BSE Sensex, has rallied 7% over the past week to over 23,900 points in anticipation of a clear win for Modi’s party, the BJP.

Our approach

Our analysis is based on the election manifesto of the Bharatiya Jantata Party (or BJP). We wish to update our readers on what impact the party’s stated policies in its manifesto will have on companies in the U.S. and, in turn, on investors.

We’ll take a closer look at the party’s stance on foreign direct investment (or FDI) in sectors like defense, insurance, and especially retail, as it has been an issue of heated debate in Indian Parliament (equivalent to U.S. Congress).

Foreign direct investment is investment in business or production (like land, buildings, or machinery) in a country by residents or companies of another country. An array of retailers, including Wal-Mart Stores Inc. (WMT) and Amazon.com Inc. (AMZN), are lobbying to enter the lucrative Indian market, with its population of over 1.2 billion.

As per the Senate’s Lobbying Disclosure Act Database, other companies, such as Boeing (BA), Cargill Inc., KKR & Co (KKR), and the Colgate-Palmolive Company (CL), have also lobbied for trade issues pertaining to India in 1Q14.

To find out more about the impact of the BJP’s policies on retailers, read on to the next part of this series.